So if your reading this post your probably like me and you have a lot of debt. I’m working to pay off a boatload of debt and it’s not fun. No matter how many articles you read debt payoff is never fun but you can make it easier with a plan. What’s that famous quote, a goal without a plan is a wish.

4 Steps to Start Your Debt Payoff Plan

Seriously tho, debt pay off goal without a plan is nothing more than a wish. Developing a plan requires a few steps though. Start with these steps:

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Step 1: Make sure you know what debt you need to pay

This might be an obvious point but make sure you know what you need to pay. Check your annual credit report and check the national student loan database. This should cover your credit cards, student loans, auto loans, and any possible collections. You can sign up for a free credit reporting service to get an estimate of your credit score (Not our focus right now) but it will let you know what is being reported by the credit agencies. Tally up the total and keep that number in front of you. Write it in a book, put it on a poster, put it somewhere where you remember what you’re working towards paying off.

Step 2: Save something for a rainy day

Seriously, you have to set something aside for an emergency. Your definition of an emergency may vary but you should set something aside. It feels like the minute you work on paying off your credit card debt everything goes wrong. For my plan, I’ve set aside money for expected upcoming expenses that don’t have a set date i.e. medical expense, car repairs. I also keep an emergency fund. After the government shutdown, I decided it was good to beef up my emergency fund. Set something aside, it lets you have a little more security.

Step 3: Set up your budget

Setting up a budget sounds easy enough but are you forecasting your expected expenses or using a zero-based budget? If your forecasts are accurate forecasting can work for you. I prefer a zero-based budget. It allows me to know exactly how much I’m planning on spending while still affording flexibility to handle unexpected expenses. My favorite zero-based budgeting app is You Need a Budget or YNAB (If you try YNAB via this link we both get a free month!).

YNAB isn’t just a budget, it comes with a wonderful blog that helps you to change your mindset. Even if you plan to use a zero-based budget, I suggest you just practice for the first three months. After three months you’ll have an idea of your real expenses and this will allow your money for debt payoff to stay towards debt payoff and not towards unexpected expenses. This brings me to my next step.

Step 4: Start the debt payoff and maintain flexibility

The first large chunk will hurt. Especially if you’ve been spending like the money is running away from you. Just make the payment and remember that you are working towards freeing yourself up in the future. If things go wrong and you need to switch up your payment for the month and lower it, it’s okay. Next month see if you can make more money or cut an expense to free up more payment money.

Remember to enjoy yourself during the process. It’s a little painful but you will be happy you did it in the future.